The big issues facing Nolan

December 15, 1995

Michael Shattock says Lord Nolan should examine whether governing bodies can cope with more laws and less cash, while John Hall (right) argues that governors face too much risk of financial liability.

The fact that the Nolan committee is inquiring into governance and accountability issues in higher and further education will come less as a surprise to those outside universities and colleges than to those inside. To the public at large the interest generated in the press by the Huddersfield and Portsmouth affairs in the university sector, and by Derby Wilmorton and St Phillip's College, Birmingham, in further education probably represent sufficient justification for a heavyweight scrutiny of what went wrong and what safeguards have been put in place. To those inside, however, the situation will look very different, simply because these high profile cases do not reflect the reality of what most staff see on the ground in most institutions.

This is not to say that problems do not exist but they need to be kept in proportion. The problems do not simply date from 1992. After all, two pre-1992 universities got into severe difficulties in the 1980s and required external help and another had a cause cel bre over its principal's housing which led to his resignation. Although Huddersfield's impact on our consciousness of governance issues has been no less than Cardiff's on finance the two post-1992 universities' difficulties have undoubtedly attracted heightened interest because of wider public concerns about the apparent side effects of mass higher education. Similarly, in further education, it is easy to forget the appalling story of mismanagement at Coventry Technical College which hit the headlines in 1991 at a time when local education authority control and responsibility was still fully in place.

However, it may be that the public perception is more right than wrong, not because there is something intrinsically wrong with governance and accountability structures in higher and further education but because growing financial stringency, re-emphasised in the Budget, is going to put these structures under much greater strain.

The polytechnics and colleges of higher education were removed from local authority control in 1988 and, with four years of careful Polytechnics and Colleges Funding Council tutelage, have been independent corporations for seven years. Even in 1988 most were quite large organisations with well developed administrations. But in 1992 457 FE colleges were projected into independence, with much less preparation and in a far less favourable financial climate. There is no question that this was a much more risky proposition; it is not unreasonable to ask whether the structures in place can take the strain.

The constitutional provisions of the post-1992 higher education institutions and the FE colleges are not dissimilar: both have corporate power vested in unicameral governing bodies with vice chancellors or principals acting as their chief executives; both have only limited staff representation on governing bodies that have strong infusions of lay members drawn substantially from the business community and the professions. There are significant differences of detail but the principles are common; and they are shared with most United Kingdom charities. They are also very comparable to what you would find in United States universities where the boards of regents or trustees would not normally have any staff representation at all other than the president of the institution. There is no reason not to believe that such structures are workable and that they can make a positive contribution. Both higher education and further education have issued authoritative guides on governance issues.

The problems arise from human fallibility. The public, as well as staff and students, are entitled to expect that people who accept public office as governors and who knowingly take on statutory responsibilities for the control of public monies, the management of an institution and the direction in which it develops will exercise their powers conscientiously and in a way that serves the best interests of the institution and the wider tests of accountability for the governance of a publicly funded body. However, governors are now faced with such a bewildering array of legislation - freedom of speech (1986), finance and accountability (1992), health and safety (1992), student unions (1994), and provision for the disabled (1995) - together with the diversity of the regulatory regime imposed by the funding councils and demands for approved estates strategies, financial plans, and corporate strategies, that they could be forgiven for asking whether the burdens are not becoming too onerous. I write with feeling, having just become chairman of a governing body in an FE college where all but one of the governors have fled leaving a massive deficit and awkward questions about the propriety of some of its expenditure, but where in addition new governors are faced with a regulatory minefield.

What is essential, and what it is possible to provide comprehensively in large institutions, is an adequate professional staff in whom a governing body can rely for sound advice. But smaller institutions, although their problems may be equally complex, will lack that depth of professional advice. The pre-1992 universities and most of the post-1992 universities have registrars or secretaries who are of sufficient status and experience to be able to give wholly independent advice on due process in decision-making, should this be required.

This matter is now being addressed in FE. The Further Education Funding Council will shortly be publishing a report on the role of the clerk to the governors but it is inevitable that some time will elapse before all such postholders can achieve the level of professional standing necessary.

If, therefore, there is a concern, it is not about the governance structures per se but about the lack of experience at all levels in the colleges to deal with the demands placed on them. The FEFC and the colleges have responded vigorously to the challenges thrown down by the 1992 Act but we should not be surprised if the effects of growing financial stringency do not in some instances put the system under very serious strain. The encouragement to borrow from commercial sources or to use the Public Finance Initiative for capital works must considerably raise the threshold of concern.

Even large institutions with a considerable depth of financial expertise are in danger of losing their way in the complex schemes being marketed by highly professional finance houses. It is asking a great deal of governing bodies, principals and directors of finance in small colleges in either sector fully to comprehend the longer term implications of such schemes. And no one in any institution can yet be clear, nor even can the Government, as to how accountability for public monies is to be fully provided without a suffocating regulatory regime, when private finance is increasingly substituted for public funding to provide capital development.

So Lord Nolan is right to be looking at governance issues in higher and further education. But his focus needs to be as much on whether governance structures are sufficiently robust to cope with the financial and legal context in which institutions find themselves as on the individual behaviour of the main participants. Perhaps the larger question is whether institutional managements will be adequate to the task.

Michael Shattock is registrar of the University of Warwick.

Universities are in serious decline. Many senior academics have recently used this, and the latest round of Government higher education spending cuts, to argue the case for top-up fees as a way out of the present crisis.

However there can be no more short-sighted view. The Government would like nothing better than for universities to become their tax collectors, thus allowing them to duck a funding crisis of their own creation.

Top-up fees may well be in the interests of the richer universities, which will be able to charge large fees and maintain their student attraction rate. They are not in the interests of the vast majority of students, who will have to find an up-front fee in order to attend university.

The problem is that, unlike the Government, universities do not have the resources to allow payment of fees to be postponed until after graduation. Finding money up-front will be the single biggest deterrent for students from disadvantaged backgrounds, and will negate the positive achievements that have recently been made through targetted access schemes. Even those who would possibly gain a scholarship may be deterred from attempting success within further education. Let us be under no illusions that it is only the exceptional few who will receive scholarships.

With top-up fees, means testing would also become the role of universities. The inevitable conclusion is that parents whose children do not receive a maintenance grant will have to find large sums of money in order to allow a private scholarship system to subsidise poorer students. Average ability students will be relegated to institutions whose only option is to cut teaching quality to a minimum instead of charging large fees.

Whether or not you believe a higher education should be free, a student contribution paid through individual fees is depressingly inefficient and unjust. The United States, prime example of a private fees system, is even now talking about nationalising the system because of its inefficiency and exorbitant costs.

Labour have made it clear that a two-tier, top-up fee system is not acceptable to them. It would therefore be a foolhardy vice chancellor who opted for fees bearing in mind the practical reality that top-up fees cannot be put in place before September 1997. Secondly, our task is to ensure that Labour become committed to an accessible system of financing education, and do not inherit a sector preoccupied with financial accumulation and elitism.

Students unions are absolutely united in their condemnation of top-up fees as the worst possible option for students. Is it not about time that their voices were listened to? We must embark on a constructive approach to ensuring tomorrow's system of higher education is of high quality, free at the point of entry and accessible to all. We must find a method of funding a continued expansion of higher education, but a system that relies on ability to learn rather than ability to pay.

Simon Webber General secretary, University of Manchester Students' Union.

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